Rothaermel Exercise 1
Tyrell Grant
1.1 Consider the brief description of Target’s stakeholder relationships and combine that information with your experience shopping in a Target store. How might Target’s stakeholders, in particular its employees, customers, local communities, and suppliers, influence the manager’s decisions about building competitive advantage in the analysis stage of the AFI framework? How might Target gather information from its stakeholders to inspire a better customer experience in the formulation stage in order to differentiate? Or in order to lower costs? Brainstorm by jotting down as many ideas as you can think of about how key stakeholders may affect or be affected by the implementation stage.
1.2 Corporate leaders are responsible for setting the firm’s strategies to gain and sustain a competitive advantage. Should managers be concerned only about the company’s financial performance? What responsibility do company managers have for other consequences of their strategies? For example, should Walmart try to mitigate the negative impact its arrival in communities can have on small locally owned stores? Should Apple be concerned about the working conditions at Foxconn (the company that manufactures the iPhone and the iPad in China)? Why or why not? Explain.
1.3 As noted in the chapter, research found that firm effects are more important than industry effects. What does this mean? Can you think of situations where this might not be true? Explain.
2.4 Identify an industry that is undergoing intense competition or is being featured in the business press. Discuss how scenario planning might be used by companies to prepare for future events. Can some industries benefit more than others from this type of process? Explain why.
3.1 Why is it important for any organization (firms, nonprofits, etc.) to study and understand its external environment?
3.2 How do the five competitive forces in Porter’s model affect the average profitability of the industry? For example, in what way might weak forces increase industry profits, and in what way do strong forces reduce industry profits? Identify an industry in which many of the competitors seem to be having financial performance problems. Which of the five forces seems to be strongest?
4.1 Why is it important to study the internal resources, capabilities, and activities of firms? What insights can be gained?
4.2A Conduct a value chain analysis for McDonald’s. What are its primary activities? What are its support activities? Identify the activities that add the most value for the customer. Why? Which activities help McDonald’s to contain cost? Why?
4.2 B In the past few years, McDonald’s has made a lot of changes to its menu, adding more healthy choices and more higher-priced items, such as those offered in McCafé (e.g., premium roast coffee, frappé, and fruit smoothies), and has also enhanced its in-restaurant services (e.g., free, unlimited Wi-Fi; upgraded interiors). Did McDonald’s new priorities—in terms of a broader, healthier menu and an improved in-restaurant experience—require changes to its traditional value chain activities? If so, how? Try to be as specific as possible in comparing the McDonald’s from the recent past (focusing on low-cost burgers) to the McDonald’s of today.
4.3 The resource-based view of the firm identifies four criteria that managers can use to evaluate whether particular resources and capabilities are core competencies and can, therefore, provide a basis for sustainable competitive advantage. Are these measures independent or interdependent? Explain. If (some of) the measures are interdependent, what implications does that fact have for managers wanting to create and sustain a competitive advantage?
5.1 How do customers view us? (Hint: First discuss the following: Who are the customers? The students? The companies that hire students? Other
5.2 Question
